Subhash & Others vs Guru Teg Bahadur Hospital
2011 Latest Caselaw 4512 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  LETTERS PATENT APPEAL NO. 422/2010

                                 Reserved on: 16th August, 2011
%                           Date of Decision: 15th September, 2011

SUBHASH & OTHERS                                       ....Appellants
             Through               Mr. Manoj V. George, Advocate.

                       VERSUS

GURU TEG BAHADUR HOSPITAL            .....Respondent

Through Mr. Avnish Ahlawat, Advocate.

CORAM:

HON'BLE MR. JUSTICE DIPAK MISRA, THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KHANNA

1. Whether Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not ? Yes

3. Whether the judgment should be reported in the Digest ? Yes

SANJIV KHANNA, J. :

This intra-Court appeal has been filed by the appellants,

who are 24 in number and are represented by a trade union.

The appellants have assailed the order dated 2nd June, 2010

passed by the learned single Judge allowing Writ Petition (Civil)

Nos. 8594/2004 and 8616/2004, which were filed by the

respondent herein-Guru Teg Bahadur Hospital. By the impugned

decision two awards both dated 4nd February, 2004 in ID No.

93/1996 and ID No. 143/1996 have been set aside. By award

dated 4th February, 2004 in ID No. 93/1996, the Industrial

Adjudicator had held that the applicants, who were 26 in

number, were direct employees of the respondent and the

contract between the respondent and M/s Lakshmi Chand and

Sons was sham and a camouflage. It was further directed that

these employees should be regularised against the vacancies,

which had arisen after termination of services of the appellants

and the balance/rest of the employees should be regularised as

and when vacancy arise. ID No. 143/1996 was filed on behalf of

35 workmen and in the award dated 4th February, 2004, it was

directed that Sushil Kumar, Subash I, Manoj, Bijender, Subash

II, Raju, Ramesh Kumar, Rajesh, Pappu, Surender, Deep

Chand, Lalit, Bhim Sen, Sanjay, Rajeev, Sri Pal, Sanju,

Ramesh, Subash III, Pradeep, Shammi and Pintoo were entitled

to reinstatement with full back wages and continuity in service.

2. Learned counsel for the appellants has submitted that the

decision of the learned single judge is contrary to law as there

was no ground and reason to upset the finding of the Industrial

Adjudicator that the contract between the respondent

management and Lakshmi Chand and Sons was sham and a

camouflage. The writ Court was not sitting as an appellate forum

and the written contract was never brought on record. Learned

counsel for the appellants has also submitted that they had

applied for information under the Right to Information Act, 2005

and Central Information Commission has recorded that the

agreements/contracts between the respondent management

and Lakshmi Chand and Sons have not been located and the

Public Information Officer has been directed to file a police

complaint stating that the records have been stolen/lost and

when this fact was discovered. He has drawn our attention to

the order dated 25th April, 2011 passed by the Central

Information Commission that there was a possibility that the file

between the respondent management and the Lakshmi Chand

and Sons was never opened. He further submits that the

recruitments in Class IV were made in 1999 and 2000 as has

been admitted in the information provided under the Right to

Information Act. Reliance is placed on International Airport

Authority of India versus International Air Cargo Workers'

Union, (2009) 13 SCC 374 and observations in Steel Authority

of India Limited versus National Union Waterfront Workers,

(2001) 7 SCC 1.

3. To begin with, reference may be made to the two

decisions relied upon by the appellants. Paragraph 107 at page

56 of the above citation in the case of Steel Authority of India

Limited (supra) reads as under:

"107. An analysis of the cases, discussed above, shows that they fall in three classes:

(i) where contract labour is engaged in or in connection with the work of an establishment and employment of contract labour is prohibited either because the industrial adjudicator/court ordered abolition of contract labour or because the appropriate Government issued notification under Section 10(1) of the CLRA Act, no automatic absorption of the contract labour working in the establishment was ordered; (ii) where the contract was found to be a sham and nominal, rather a camouflage, in which case the contract labour working in the establishment of the principal employer were held, in fact and in reality, the employees of the principal employer himself. Indeed, such cases do not relate to abolition of contract labour but present instances wherein the Court pierced the veil and declared the correct position as a fact at the stage after employment of contract labour stood prohibited; (iii) where in discharge of a statutory obligation of maintaining a canteen in an establishment the principal employer availed the services of a contractor the courts have held that the contract labour would indeed be the employees of the principal employer."

4. Paragraphs 35 to 37 at page 327 of the above citation in

the case of International Airport Authority of India (supra)

read as under:

"35. As noticed above, SAIL did not specifically deal with the legal position as to when a dispute is brought before the industrial adjudicator as to whether the contract labour agreement is a sham, nominal and merely a camouflage, when there is no prohibition notification under Section 10(1) of the CLRA Act.

36. But where there is no abolition of contract labour under Section 10 of the CLRA Act, but the contract labour contend that the contract between the principal employer and the contractor is sham and nominal, the remedy is purely under the ID Act. The principles in Gujarat Electricity Board continue to govern the issue. The remedy of the workmen is to approach the industrial adjudicator for an adjudication of their dispute that they are the direct employees of the principal employer and the agreement is sham, nominal and merely a camouflage, even when there is no order under Section 10(1) of the CLRA Act.

37. The industrial adjudicator can grant the relief sought if it finds that contract between the principal employer and the contractor is sham, nominal and merely a camouflage to deny employment benefits to the employer and that there is in fact a direct employment, by applying tests like: who pays the salary; who has the power to remove/dismiss from service or initiate disciplinary action; who can tell the employee the way in which the work should be done, in short, who has direction and control over the employee. But where there is no notification under Section 10 of the CLRA Act and where it is not proved in the industrial adjudication that the contract was a sham/nominal and camouflage, then the question of directing the principal employer to absorb or

regularise the services of the contract labour does not arise."

5. The short question which arises for consideration is

whether the contract between the respondent management and

the contractor, namely, Lakshmi Chand and Sons, was sham

and nominal, rather a camouflage and in fact the appellants

herein were employees of the respondent.

6. The appellants in their claim petitions in the two IDs had

stated that they were employed as safai karamcharies by the

respondent management on temporary basis. After some time,

they were placed under the contract system and were denied

facilities of conveyance allowance, house rent allowance, etc.

However, in the claim petition, no date of appointment was

mentioned or stated. On the other hand, the respondent

management in their reply had stated that the appellants were

not their employees. The appellants were employees of Lakshmi

Chand and Sons, 65/57, New Rohtak Road, New Delhi-5, a

contractor employed with the respondent for providing cleaning

services. After working for 2-3 months, the appellants started

claiming their right to permanent absorption and employment

directly under the respondent hospital.

7. In the affidavit by way of evidence, however, Sushil Kumar

had stated that he had been working in the respondent hospital

since 1st March, 1993. However, he was not given any

appointment letter or other facilities though appointment was on

permanent basis and after some time he was placed under the

contract system and deprived of all benefits, which he was

entitled to.

8. The learned tribunal accepted the contention and stand of

the appellants in ID No. 93/1996, inter alia, recording that the

contract between the respondent management and the

contractor-Lakshmi Chand and Sons was not produced and it

has to be held that the same was a camouflage and sham

contract for the name's sake. For giving the above finding, the

Industrial Adjudicator relied upon the fact that the respondent

management in their written statement had admitted that the

contract was given to keep some part of the hospital neat and

clean and the work assigned was of continuous and permanent

nature. He had also observed that some posts of sweeper had

fallen vacant but these had been filled up by outsiders or third

parties and not by offering employment to the appellants.

9. The aforesaid findings recorded by the Industrial

Adjudicator have been rightly interfered and not accepted by the

learned single Judge on the ground that the Industrial

Adjudicator had made an error in the decision making process.

In ID No. 143/1996, Sushil Kumar on cross-examination had

stated as under:

" Management is a Govt. concern. I appeared in person before medical supdt., who was at that time making recruitments for various posts. I had come to know about it from reliable source. I had made application for the purpose, but I do not have copy of the same with me. I do not remember name of Medical Supdt. It is wrong that I did not appear before Medical Supdt. nor made application in writing for employment. My name was not regd. with any Employment Exchange. It is wrong that I was employed by contractor M/s Lakshmi Chand & Sons, 65/57, new Rohtak Road, New Delhi-5. It is wrong that contractor was making payment of salary to me. I was made payment by mgt. on plain voucher and I cannot produce any salary slip. I do not know if deduction of PF was made from my salary. (vold.) paid by mgt. Ad card Ex. WW1/4 does not bear any postal stamp or stamp of management.

It is wrong that letter Ex.WW1/1, WW1/5 & WW1/7 were never sent. I do not know English."

(emphasis supplied)

10. The respondent had also placed on record

correspondence exchanged between them and Lakshmi Chand

and Sons pursuant to which the latter was awarded the contract

for cleaning and upkeep of a portion of the hospital. The

respondent in their evidence before the Industrial Adjudicator

had categorically stated that the respondent management had

never paid any salary or wages to any of the appellants. The

respondent had awarded sanitation work to Lakshmi Chand and

Sons and charges were paid by them to the said concern. The

appellants were never appointed through any process of

selection and the respondent hospital being a Government

hospital has to take sanction from the Government for filling

permanent vacant posts or create an additional post. Thereafter,

these posts have to be advertised and a selection procedure has

to be followed. As per the prescribed selection procedure, the

candidate must be registered with the Employment Exchange.

The respondent being a Government hospital, all payments

made have to be recorded. It was further pointed out that the

Lakshmi Chand and Sons was no longer a contractor for

sanitation work and the hospital was taking sanitation services

from its own employees. The deponent, a witness of the

respondent hospital, was cross-examined by the appellants. In

the cross-examination, he has stated that the appellants were

never appointed by the management and he could not state

whether they were employees of the contractor.

11. The learned single Judge is correct in recording the finding

that there was no dispute that at the time of termination, the

appellants were employees of the contractor. The non-

production of contract, therefore, by itself was not material and

relevant. The question was whether the said contract and

employment of the appellants with the contractor was merely a

camouflage and a make belief. The appellants had contended

that they were initially employed directly by the respondent

management. This was the core and the edifice of the claim

made by the appellants. The Industrial Adjudicator did not

examine and answer this material and relevant question and

went on other aspects. The learned single Judge examined the

said aspect and the evidence on record and came to the

conclusion that there was no evidence at all to show, establish

and give a finding that the appellants were initially directly

employed by the respondent management. There is no

appointment letter, pay slip and proof of payment by the

respondent to the appellants. The appellants did not ask the

respondent management to produce their accounts or give the

name or details of persons from whom payments were received.

The witness of the management was not cross-examined on the

said aspect. The respondent is a Government hospital and

whatever payments were/are made have to be accounted for,

vouched and recorded. They are subjected to audit both internal

and external. Even if ad hoc/casual employees were/are

appointed, procedure has to be followed and thereafter

payments are recorded and made to the ad hoc/casual

employees. There is no material and evidence to prove and

establish initial direct employment between the appellants and

the respondent. Once it is held that there is no ground or

material to hold that the appellants were initially directly

appointed as temporary/casual workers by the respondent-

management, the claim of the appellants that the subsequent

contract between the respondent-management and the

contractor Lakshmi Chand and Sons is sham and camouflage

has to fail and has to be rejected. The leaned single Judge,

therefore, is right in exercising the power of judicial review and

setting aside the two awards.

12. Pursuant to awards, the appellants herein had filed

applications under Section 17B of the Industrial Disputes Act,

1947 and they were directed to be paid last drawn wages or

minimum wages, whichever were higher. The learned single

Judge has directed refund of the minimum wages in excess of

the last drawn wages. Having heard learned counsel for the

parties, we feel that the appellants should not be directed to

refund the payments made to them under Section 17B of the

Industrial Disputes Act. Direction of the learned single Judge to

this extent is set aside. The appeal is accordingly disposed of.

There will be no order as to costs.

(SANJIV KHANNA) JUDGE

( DIPAK MISRA ) CHIEF JUSTICE

SEPTEMBER 15, 2011 VKR